I’m sure you remember the movie Karate Kid. There’s a great scene in the movie where the old karate instructor, Mr. Miyagi has given a challenge to his student. The young man is to leap from a rock, turning full-circle mid-air to land on one foot on another rock. It sounds simple, but in actuality is very difficult to do. The wise instructor was trying to impart a valuable truth to his student saying, “The key to life is balance.”
And so it is for the multi-line insurance agency owner – the challenge of achieving balance. These balances include balancing expenses versus revenue, balancing the agency’s book of business for the best return on investment and balancing the agent’s time for optimum results. Once again, it sounds simple, but as many agents are discovering, the balance they seek is difficult to achieve.
If your agency is like most multi-line agencies, the “multi” is a bit of a misnomer. The traditional business model for multi-line agencies was to build a foundation with auto and fire/home business, and perhaps sell a few life and/or commercial policies just to round things out. The thinking was that when agencies reached the 3,000 + active policies benchmark, the agency would be successful, profitable and all would be golden.
It’s time for a reality check.
Let’s see if all really is golden in your agency. As agency owners, we have come to accept the reality that auto and fire customers require a lot of service. Many of us have staffed up to provide the best possible service to our clients, regularly conduct annual reviews and feel that we are doing all the things necessary to run a successful insurance agency. The reality may not be quite that rosy. Sure, we have the staff, we provide a good benefits package to be competitive with other industries, but it all comes at a price. Have you checked your agency bottom line lately?
Most of us are so busy, we just keep on selling and selling year after year, thinking that if we are growing revenue that all is well. Many agents give little thought to where their money is being spent or if the agency bottom line is meeting goals and expectations. Just like going to your physician every year, perhaps it is time for some agency analysis, an annual check-up.
What agents are discovering is that the traditional two-dimensional (auto and fire/home) business model comes with a high price in relationship to agency profits. Servicing auto customers requires time and staff, both of which cost money. It’s a catch-22 situation. An agency must provide high-quality service to its customers or risk losing them to the competition. Before we lose any clients let’s stop playing defense and switch to an offensive model.
Remember, as Mr. Miyagi said, “The key to life is balance.” Multi-line agents are re-thinking their business model and putting into place a strategy for sustained growth into the future.
To help sustain agency growth over time, check out our library of video training tools.